Bridge financing, as the name suggests, is designed to get you from where you are now to where you need to be.
This type of financing helps investors close commercial real estate deals quickly—especially when traditional bank loans are too slow or simply unavailable. You’ll also hear it referred to as hard money lending.
Why Use Bridge Financing?
Bridge loans are ideal for deals that need speed or flexibility—like value-add or turnaround projects. Because banks tend to be conservative, they often won’t lend on properties that are underperforming or need major improvements. That’s where bridge lenders step in.
These lenders are willing to take on more risk in exchange for a higher return. In other words, they’ll fund deals that banks won’t touch—because they know the investor is planning to improve the asset and boost its value.
What’s the Catch?
Since bridge loans come with higher risk, they also come with higher interest rates—typically 4 to 5 basis points (or more) above a conventional bank loan. But the upside? Most bridge lenders offer interest-only payments, which can help keep your monthly cash flow under control during the renovation or lease-up period.
Real-World Example
Let’s say you’re trying to buy a commercial property that’s only 60% occupied. You approach a traditional bank for a loan, but they reject the deal—it’s too risky, and they’re not confident in your experience as a sponsor.
But a bridge lender sees the opportunity. They’re able to close fast, helping you beat out competing offers. You lock in a 24-month bridge loan with interest-only payments.
You move quickly to renovate the property. Once it’s upgraded, you raise rents and boost occupancy. Now the property looks much more attractive on paper—and traditional lenders take notice.
After 12 to 24 months, you refinance into a long-term conventional loan with a much lower interest rate and 20-year amortization.
If the property’s value has increased significantly, you may even be able to pull cash out during the refinance—giving you capital to invest in your next deal.
The Bottom Line
Bridge financing is a powerful tool for investors who:
- Need to close fast
- Are acquiring properties that require repositioning
- Can’t qualify for bank financing—yet
- Plan to refinance once the property stabilizes
Used wisely, it can be the launchpad to your next big project. Just be sure to factor in the higher interest rates and have a clear exit strategy in place.
We love working with foreign nationals investing in U.S. commercial real estate, helping them secure the financing they need to make deals happen. And since we’re not just lenders—we’re investors and developers too—we understand the challenges you’re facing.
Give us a call and let’s discuss your next deal.
Lance Langenhoven
Head of Commercial Lending
